Canadian stocks surged in September, and earnings revisions are trending higher, led by the financial sector, says National Bank Financial Inc. (NBF) in a new report.
The S&P/TSX composited index enjoyed its strongest monthly return for the past 14 months in September, gaining 2.8%, the NBF report says. On the strength of that performance, the index is now in positive territory for the year, up 2.3%.
S&P/TSX earnings revisions also turned positive in the past month, the report notes, which contrasts with slightly downward revisions for the U.S. S&P 500 index.
"Importantly, the upward revisions in Canada are relatively widespread, with seven of the 11 main S&P/TSX sectors showing improved 12-month-forward earnings," the report says.
The financial sector is leading the way, generating upward revisions that are the best in six years for the sector.
"We remain overweight in financials as this sector is set to benefit from higher interest rates in a strong economy," the NBF report says.